THE HOSTILE TAKEOVER OF FRANKLIN CONFECTIONARY12 Franklin and Co. is one of the world’s largest confectionery businesses

[answerhappygod]

THE HOSTILE TAKEOVER OF FRANKLIN CONFECTIONARY12 Franklin andCo. is one of the world’s largest confectionery businesses with asignificant share in many of the world’s biggest confectionerymarkets, including many emerging markets. It has a long and proudtradition, stretching back more than 150 years, including a longhistory of placing great emphasis on the welfare of its employeeswhich has managed to remain part of its ethos during its progressto becoming a global company. It employees over 600 employees atcompany head office and major production facility in the Midlandsof the UK (that occupies the same Victorian buildings that havebeen Franklin’s home for the last 110 years). It also has twosmaller production facilities in Northern Ireland and South Walesand four geographically dispersed distribution centres. As part ofits commitment to its employees, and despite the paternalist natureof its approach to people management, the company has alwaysrecognized and sought to build positive relation[1]ships with anumber of trade unions. In the 1990s, it decided to enter asingle-union partnership agreement with a large general union andall staff were encouraged to join the union. Whilst con[1]tentiousat the time, not least among other unions who became marginalized,this partnership has proved critical to the company’s success withunion representatives taking very seriously their responsibilitiesboth to the welfare of union members but also to the viability andsuccess of the firm. Six months ago, however, Franklin was thesubject of an aggressive, and ultimately successful, takeover by anAmerican conglomerate, Van Etten Foodstuffs. The initial takeoverbid was met with widespread workforce resistance that culminated inthe first ever incidence of industrial action at Franklin, a mass‘sickie’ affecting over 80 percent of shopfloor staff resulting inall but one of its production lines closing. The initial bid wasimmediately rebuffed by the company’s chief executive, along-serving employee who viewed himself as the defender of a proudindustrial heritage. Undeterred, Van Etten returned with a numberof subsequent bids of increasing attractiveness to shareholders andto smooth negotiations made a number of representations vowing toprotect Franklin’s traditions and to take a largely hands-offapproach to workforce management. Eventually, shareholders’ desirewon through and the takeover was completed. Since then, in the eyesof employees, Van Etten have proved duplicitous. The long-servingchief executive has been replaced by an expatriate American‘airlifted’ into the firm from another subsidiary with, accordingto a leaked memo, the explicit brief of sorting out the poorproductivity and inefficiencies at Franklin’s main productionfacility. Already Van Etten has made the decision to transferproduction of some product lines to an existing facility inKatowice, Poland and is looking to ‘recruit’ (or force) experiencedFranklin employees to spend three months in Poland training staffin the use of the specialist production equipment that will soon beshipped to Katowice. The company is currently locked innegotiations with the trade union at the plant to scale back whatit claims are ‘unsustain[1]able’ employee benefits, warning thatwithout some concessions then jobs will be lost. The union hasaccused the new CEO of scaremongering, not least in raising thethreat of future offshoring. There have even been some accusationsof ‘union-busting’ activities at the company, for instance, anoffer to increase the pay of distribution drivers in return forforegoing union membership. Business commentators have noted thatthe initial actions of Van Etten could have been easily foreseen asthey are reflective of the approach to HRM and HRD in the parentfirm. In many ways, the company is a clear product of its countryof origin. In corporate promotion, it presents itself as a ‘good,old family firm’ (although the Van Etten family has long since hadany involvement in running of the company) which treats its staffas kin, operates open door management policies, stressesinformality, and promotes individual initiative and selfreliance.The reality is often seen somewhat differently with corporatemanagement viewed as ruthlessly authoritarian, making decisionswith little or no consultation with staff and using individualismas a means of engender ‘productive competition’ among individualstaff as well as between staff groups. HRD at Van Etten is informedby the view that training is a cost to be minimized with a focus onreturn on investment and individual responsibility for developmentand career progression. Despite these challenges, Franklincontinues to perform extremely well, posting record profits for thethree months to December 2015. Sales figures have risen steadilyover the past five years and successful entry into new marketsmeans that the company anticipates continued growth. Whilst as yetthe impact of the acquisition has been limited for many workers,there is the sense that Franklin – as it has long existed - isliving on borrowed time before it is brought fully into the fold ofVan Etten with significant repercussions for its HRD and HRMpractices. Inevitably, despite the financial performance of thefirm, inevitably, Van Etten has prioritized streamlining thebusiness to make it more competitive and has placed a strongemphasis on reducing costs over the next 18 months, despite initialclaiming to be keen to preserve Franklin’s longstanding reputationas a firm that takes care of all of its employees.
Question : To what extent does the traditional approach topeople management at Franklin adhere to the cultural profile of theUK and the manner in which this suggests HRM is conducted?